How To Differentiate Performance Without Ratings

The biggest barrier to modernizing the approach to performance management is the HR-created need to have a "number" or category to help determine pay. If we get rid of performance reviews and ratings, how will we calculate merit increases? This question indicates that the real need is finding a method that effectively differentiates performance.

Numerical rating (out of 5) Category/Pay increase

5 Outstanding - 4-5%

4 Exceeds - 3-4%

3 Meets - 2-3%

2 Needs Improvement - 0%

1 Unsatisfactory - 0%

The rating category determines the percent increase, sometimes expressed as a range (2-3%). Traditional performance management schemes, whether online or paper-based, use an approach that involves the following:

1. Rating and commenting against five or more competencies (communication, teamwork, accountability, customer focus, innovation, results orientation, etc.).

2. Rating and review of goal achievement.

3. An overall rating representing a single category, such as "Meets Expectations."

Managers end up scratching their heads wondering how to fill out the form. They wrack their brains trying to think about how the employee performed against each competency. They may even become fixated on filling out a form instead of thinking about the employee.

Performance is a combination of results and behaviors. Results describe what gets done and observable behaviors describe how the work gets done.

Based on the definition of performance as a combination of results and behaviors, we can generate seven performance types:

Rather than using a single category, such as "meets expectations," you can view performance as a two dimensional model.

Most managers can slot their team into one of these seven performance types (filling out a form to assess and rate competencies isn't required to do this). At this point in the process we want to avoid being too granular because this leads to over-thinking the form. You don't want to lose sight of the employee or how to assess and manage their performance.

It's helpful to think about employee's "coordinates" relative to one another, so plot them out visually. Using this Employee Performance Continuum grid can give a visual snapshot of the makeup of your workforce. Simply place dots on the grid to match each employee's standing on the continuum.

Download a printable version here.

While the placement of the "dot" is intuitive, the key is verbalizing the thinking behind the plotting. It's similar to a student who gets the correct answer to the math equation, but is then asked to explain their thinking and show their work. As you can imagine, the discussion is quite robust.

Discussions about who goes where on the continuum can be very productive and insightful. Sometimes everyone is in agreement about the plotting, and other times new input is shared and the coordinates are adjusted. This ability to give and receive new input is the reason I label the process "Discovery" as opposed to "Calibration". The process is an opportunity to gain and contribute different perspectives to reach a consensus about each individual. New points of view versus "go-to-bat" for someone or argue for the highest "position". Once the plotting process is complete, it can also be useful to get a snapshot of your workforce as a whole. What percentage exhibit top-tier results but poor behaviors? How many one-year employees have made the jump from the newly hired category to mid and high performance? These are the kinds of questions you can answer with the Visual Performance Continuum grid.

Inevitably when I share this model with a group of HR pros someone will make a comparison between the 9-box matrix and the Employee Performance Continuum, which is made up of four boxes and is used for assessing performance. The 9-box measures performance and potential and is primarily used in succession planning.

While succession planning and performance appraisal are worth linking, these are two distinct activities. The purpose of the 9-box grid is to look into the future of your organization while the Employee Performance Continuum assesses performance now and what the employee can do to be even more effective in their role. This snapshot of current performance can be used to determine salary actions ( in most cases, a salary-increase).

Let's set the traditional forms and ratings process aside and think more simply. Performance can be assessed without the use of a single rating category and it can be done more accurately and holistically. The process of a manager filling in the form and randomly assigning ratings to competencies, goals and determining an overall rating is familiar, but leaves something to be desired.

This exercise should not involve using a permanent marker to put the employees into boxes. This isa point-in-time snapshot. It's intentionally called a continuum to account for movement and growth. Conversations that help employees move forward and develop will drive more employees to the upper right. The goal is to see where their current performance falls and engage in conversations designed to help people move forward. This means working with your managers to move from a judging and evaluation approach to a coaching and mentor mindset.